Import Letters of Credit

Import letters of credit are one of the most popular ways to pay for imports and give the exporter confidence in getting paid.


A letter of credit can solve two at least two problems:


  • client doesn’t tie up money for several months until his order is produced and on the way 

  • the supplier’s bank can often finance orders against credit, helping the supplier do business as well.


Once the shipment is on the way to the client the supplier will want to get paid against shipping documents. There are a couple of ways to handle that part of settlement:


  • the supplier sends shipping documents to the bank that issued the LC. In this case we send the client copies of documents for review, and an invoice to pay for the documents; client the pays for documents, our group uses that money to pay supplier and releases the documents to the client to complete the deal.

  • OR the client and supplier settle directly with each other directly. The LC issuing bank is not involved in settlement of the trade.  

We're able to open letters of credit to your suppliers without requiring collateral to support the deal;  we do expect you to be ready to pay for the shipment once the goods have been shipped.  In cases where your end customer is credit-insurable, we may be able to provide bridge finance from payment for goods to the point where the customer pays the invoice.  


This type of LC can be opened without interfering with any banking relationships you may have; it can be treated as an off-balance-sheet bit of finance.  It can be useful in cases where you may be close to your bank limits, or you need to initiate your import trade based on capital you expect to receive well before you need to pay for the shipment.  It's an unsecured bridge finance mechanism for imports.

 

Next Steps

Opening letters of credit for our clients is a simple process:

  1. Client fills out the application

  2. We prepare a draft Letter of Credit for review by client and supplier

  3. Once the draft is approved client pays the opening charges, and provides simple paperwork like the company's certificate of incorporation and passport of authorized signer

  4. Upon receipt of payment, the letter of credit is then issued

If you're interested in working with us to expand your import capacity, please fill out the form below and we'll send you an application.

Inquiry Type
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Stamford, CT 06902
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